Everyone I know who lives in the Midwest has a lake house. I used to think lake houses were only for fancy people, but now I know better.
They’re essential for summer fun.
Bonus? They can also be a great real estate investment if purchased properly.
Nick’s family has a great lake house in Columbia City, Indiana on Tri-Lakes. It was Father’s Day weekend and we had plans to visit family there anyway – why not mix real estate fun with a little family R&R?
Like I mentioned in my post from our adventures in Columbus, OH, our investment criteria is:
- Meet the 1% rule.
- This means that our monthly gross income is 1% of the purchase price. So, if we’re looking at a property that costs $100,000 we want to make $1,000 a month on rent.
- Each “door” or apartment/home must be under 2,000 square feet.
- We believe that this will help us keep the cost of renovations down and allow us to invest in better quality materials. We also love small spaces and believe our future residents love small spaces too. Less to take care of means more time spent doing whatever it is they love.
- Great Air BnB potential.
- It’s no secret that Nick and I love the Air BnB model. Maybe it’s our history as college RAs or my extensive experience in the service industry, but, regardless, I’m excited for the opportunity for travelers to rest their heads in our unique short-term rentals.
- Great Neighborhood
- Great neighborhoods reduce our investment risk. We focus on finding distressed homes in thriving neighborhoods.
With that in mind, we began by driving around in search for For Sale by Owner signs, Realtor ads, or misfit homes that were lacking the attention they deserved.
A lot of the lake front homes were gorgeous.
And some were Plain Janes with tons of potential.
And some are total tear downs.
Well, you can’t really tell that this property is a teardown, but it is. However, Nick and I see tons of potential here. Unfortunately, the sellers, who have had it off and on the market for over 2 years, are asking 60K.
Yes, the garage you can barely see is brand new, but where it’s located doesn’t make sense. The lot is quite large. The road you see in this picture is obviously a dead end and isn’t the most convenient. Behind the house is a road that would provide access to the house much easier. We’d prefer if the garage was located there so pulling into it is easier and would make more sense.
Additionally, the house, which again, you can barely see, has been vacant for 4+ years. Sure, it’s adorable:
But wait until you see the inside:
We could probably preserve the bones of the property. The problem is she’s been vacant for so many years, we’re nervous the well system may have issues. Furthermore, the house isn’t located in a spot that maximizes the view.
Even if we kept the property where it is we would definitely want to tear down the garage and move it to the other road. This would add value to the property. We would probably make the garage a carriage house, too. More Air BnB potential!
Then, we’d have to take down all the giant trees that are blocking the view of the lake from the front of the house. We’re looking at 10,000 in tree removal alone. We’d also have to knock down the garage. All of this work is just to get the lot in a place where the layout and views make sense.
Because of this, we can’t offer what the sellers are asking. There is also some local drama going on that affects the well water – it has to do with a local farmer that wants to add several hundred more cows to his property – which ups the amount of cow manure that can end up in the water. So, with all the landscaping, water drama, and the fact that the home has been vacant for several years, we decided to make an offer of 20K.
We know. It’s low. The listing agent was a bit taken back by our offer – even though it was all cash – but we wanted to make sure we were protecting ourselves.
We haven’t heard back from the listing agent. The property is still for sale. We think we’ll reach out to the agent again in a few months, when it still hasn’t sold, and see if she wants to engage in a bit of negotiating.
We love the property. Did we mention it is steps away from Nick’s Aunt and Uncle’s lake house?
Do you have an investment property that is a lake house? How has it treated you?